Stocks Rise to Records as Oil Gains, Bonds Slip: Markets Wrap

  • Greenback erases losses as Trump comments on China currency
  • Gold slumps while copper rallies as China exports rise

Algebris' Gallo Warns of U.S. Dollar Exporting Inflation

U.S. stocks jumped to another record and crude rallied as investors reignited reflation trades while awaiting details of the Trump administration’s plan to cut taxes. The dollar erased losses after the president vowed the currencies of the U.S., China and Japan would soon be on “a level playing field.”

The S&P 500 Index climbed for a fourth day, with energy producer pacing gains after oil jumped amid OPEC output cuts. Bank shares briefly added to gains after the Federal Reserve’s top Wall Street watchdog announced his retirement. Copper rallied the most since 2013 as China stepped up exports and a workers went on strike at a major mine. The Bloomberg Dollar Spot Index snapped a six-week losing streak.

While a report showing a slide in consumer confidence broke a streak of rising sentiment indicators, investors focused again on Trump’s comment that he’ll outline a “phenomenal” tax plan within weeks juiced reflation trades. Former Goldman Sachs Group Inc. president Gary Cohn is leading the effort to craft the tax overhaul, a White House official said Friday, further lifting optimism that the plan will be business friendly.

Trump met with Japanese Prime Minister Shinzo Abe at the White House, with the two affirming the nations’ close relationship without providing any details on investment or trade discussions. The president’s comments on the currencies came a day after a phone call with China’s president, Xi Jinping.

What’s coming up in the markets:

  • OPEC’s monthly report is due Monday, after the International Energy Agency said the cartel achieved a record 90 percent compliance with a production accord.
  • Federal Reserve Chair Janet Yellen testifies before the Senate banking panel on Feb. 14. It will mark her first remarks since January jobs data showed slower wage growth than anticipated, and provide her a chance to weigh in on the outlook for fiscal stimulus proposed by the Trump administration.
  • Readings on inflation and retail sales highlight the week ahead in economic data, with investors looking to see whether the American consumer was as upbeat about spending as sentiment surveys had been indicating.

Read our Markets Live blog here.

Here are the main market moves:

Stocks

  • The S&P 500 rose 0.4 percent to a record 2,316.47 at 4 p.m. in New York, for a weekly advance of 0.8 percent. Industrial shares rose the most in the week, followed by consumer-discretionary shares.
  • The Dow Jones Industrial Average and Nasdaq Composite Index also closed at records. The Russell 2000 Index of small caps capped its first all-time high of the year.
  • The Stoxx Europe 600 Index advanced 0.2 percent to cap a gain in the five days.
  • The MSCI Emerging Market Index jumped 0.6 percent to the highest since July 2015. The index is up 1.4 percent in the week and 8 percent so far in 2017.

Bonds

  • Treasuries fell, with 10-year yields rising one basis point to 2.41 percent. The benchmark yield increased six basis points on Thursday, halting the longest rally in eight months. The rate slipped six basis points in the week. 
  • BlackRock Inc. joined Bank of America Corp. in warning traders that they may not want to give up on the Federal Reserve’s March meeting.
  • The yield on Greece’s two-year notes retreated 116 basis points to 8.87 percent. The debt topped 10 percent yesterday on the impasse between the country, its creditors and the IMF.

Currencies

  • The Bloomberg Dollar Spot Index was little changed Friday after reversing early losses.
  • It rose 0.6 percent in the five days to snap a six-week losing streak, the longest since 2010.
  • The euro fell 0.2 percent to $1.0636, while the yen traded at 113.404 per dollar.
  • Citigroup Inc., the world’s largest foreign-exchange trading firm, sees the dollar rising this year even as the president talks the greenback down.

Commodities

  • Oil climbed 1.6 percent to settle at $53.86 a barrel Friday, erasing its decline over the week. Prices rose about 3 cents in the five days.
  • Gold fell 0.2 percent to $1,234.60 an ounce, after dropping 1.1 percent on Thursday. The metal, which is considered a haven asset, was at a three-month high earlier in the week.
  • Copper posted the biggest gain in almost four years, rising 4.6 percent to settle at $6,090 a metric ton in London. Aluminum, nickel, tin and zinc also advanced.
  • Iron ore futures jumped 3.8 percent in a fourth consecutive day of gains exceeding 1 percent.
Before it's here, it's on the Bloomberg Terminal.
LEARN MORE